Saturday, 24 January 2015

Property taxation in the UK is on the occupier, not the owner, as the default rate is lower than if. like the Americans, one taxes ownership. Is it intended that the mansion tax should be on owners not occupiers? That requires a completely new tax department. If it is on ownership are joint tenants or tenants in common (such as husband and wife) to be taxed relative to the value of their shares? What if the property is long leasehold? Is the tax to shared between the lessee and the reversioner? Is a mortgage to be deductible?

None of these points have been mentioned by Miliband, presumably because his knowledge of property law is zero.

As pointed out in the article, the tax lowers the value of the property as the tax is effectively rent. All property taxes are in truth a way of nationalising without paying compensation (1). An annual tax of £3,000 should lower the value by around £100,000 in present circumstances. (2)

One can tax by reference to a property value, but the tax has to come out of income or some cash flow, such as from a sale, for no power on Earth can convert a house into food, heat, lighting or clothes for old age pensioners. The state is mainly by taxation appropriating part of the income (GDP) of the nation and the tax on property, despite its name. falls on the income of the tax payer. If he does not have the income he has to sell to someone who is capitalising income, that is saving.(3) The mansion tax will precipitate many sales as owners decide to trade down.(4) That will raise prices at the lower, aggravating the problems of first time buyers.(5) There is a limit on property taxes, the net annual saving of the personal sector (4).

1) in which case income tax is nationalisation of labour

2) so making the property more affordable. That's good, isn't it?

3) Poor widow bogey

4) Your evidence for that is?

5) Yeah, right, how many first time buyers are in the "just under £2M" market? Human shield.

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comments:

What I completely cannot understand with LVT objetors is their almost wilful blindness to the fact that 'all profits return to rents'. Once you get your head around that, and its implications the only answer can be 'LVT now!'. I concede that this won't be welcomed by rent seekers - e.g. BtL'ers and the Government - but really the rest of us should be shouting for LVT from the rooftops.

He is correct however about the issue of occupiers not ones being liable for property tax. Affected couples are already transferring titles to the non-working spouse and gardens and garages etc are having sub-leases created etc. No upfront money is being paid by those below the higher rate tax band according to the latest Ed Balls announcement.

Property lawyers are already advertising these new strategies. A whole new business in tax avoidance has just begun I suspect. Leasehold, self-contained granny flats will be appearing everywhere.

Probably unnecessary, as I don't see this policy seeing the light of day through Parliament as opposition in London is significant and a further autumn election is likely.

There's a lot of service charge in mooring fees, e.g. in your example, "16a/32a electricity at each berthWater points on every pontoonHeated toilets and showersDisabled access to pontoons & toiletsPump out facilitiesHarbour Master"

If you moor in the middle of the river with no services, you pay a lot less for the same location.

Din, apparently the Yanks do this with timber-framed buildings up to a certain size, but with a typical British home which is brick built on questionably foundations, it's not really an option.

B, yes, but... [You know perfectly well what I mean].

J, but most households are hefted to one location, parents have got to go to work; kids have got to go to school.

And I'm not sure you're just allowed to stick your boat any old where on Lake Windemere, if you anchor in the middle, the extra hassle of rowing to the shore and back a few times a day would completely negate the point of it.

And it doesn't matter, if enough people decided to trade down to a boat, competition would drive up mooring fees in good locations and rental values of physical land would fall and it all evens out.

I'm really puzzled about the lower default rate comment. Property tax is secured on the deed in the US. If you default, the local government gets first lien on the property. Probably a reason why banks typically collect a direct debit of property tax + mortgage payment, to make sure that the owner does not fall behind on the former and compromise the bank's collateral. I wonder if a similar thing could be done here in a roundabout way. If the council tax is in arrears, a call out to the fire brigade results in a first lien charge against the property to cover the entire cost of the firefighting operation. Ditto for the removal of squatters. The bank would very quickly move to include the council tax in the mortgage payment or whack up the interest rate a whole bunch.

Mark, my entire live on a boat proposition was not exactly supposed to be a serious proposition. Its a bit like "yeah sure can avoid income tax, just simply resign"

For what it worth, current moorings on Windermere are around 1800 per season (season is 8 months) and no you cant anchor in the middle of it. But you can stop for a week in whitehaven, move to maryport, then to workington every weekend for essentials and anchor off a moor in the harbour. Only works if you live on the coast though. :)